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South Africa looks set for an even larger strike this week

by , 30 June 2014

It's a common joke that South Africans are Olympic level strikers and it must be true because not only are we eligible for the marathon, after the 5 month long platinum strike, we appear to want to try our hands at the relay. Just as we ended one strike last week, we look set for another even larger one this week.

Another strike for South Africa

Approximately 220 000 workers in the metals and engineering sector are set to go on strike next week asking for  a 12% increase. This is roughly twice the inflation rate. Luckily management is offering 8% , so I foresee an eventual compromise of about 10%. Hopefully both parties will realise this and come to a swift agreement. 
 
One possible roadblock is the political aspect. The union behind the strike, NUMSA, is in transition at the moment. It looks to be on the way out of COSATU and possibly creating its own political party. With hundreds of thousands of members and even more associated dependants, it seems quite possible that they could build a party that would rival the EFF at the very least, while weakening the current ruling alliance.  

In order to accomplish this, NUMSA need to show that it’s tough with employers while not being as extreme as AMCU. Just how tough they want to appear will likely determine how long the strike will be. If it lasts longer than a week or two, it is likely to have a significant impact on GDP for the third quarter. Given that we have effectively written off the first half of the year due to the platinum strike, a weak Q3 would mean that we will likely not beat 1,5% growth for 2014 as a whole.
 

4th of July brings about an early release

This week a shortened week for US markets, due to the 4th of July Holiday. Thus we will get Friday’s releases on Thursday, including Non-Farm Payroll Numbers. Regular readers should know just incredibly influential these numbers are. Expectations are for an increase of 210K. China will be releasing PMI numbers. Expectations are for a slight uptick in growth rates, reinforcing a trend we have seen over the last few months.

We will also be releasing local trade and money supply data at the start of the week. Our last trade numbers were better than expected, however it must be noted that trade figures are very volatile. Thus we are likely to see a return to mean this time around. Also out this week are PMI and vehicle sale figures. Given the imminent strike action, PMI will likely come in well below 50. 


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South Africa looks set for an even larger strike this week
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